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New 15 year Mortgage with No Down Payment Unveiled

by Tim Hart

A non-profit company is testing a new mortgage idea that could impact mortgages from here on out. The company is offering low to moderate income home buyers a 15 year mortgage with little to no money down. The loan, called the Wealth Building Home Loan, differs from a traditional 30 year fixed rate loan because income is weighed much more heavily than in a traditional loan. The WHBL gives a generous credit requirement and allows buyers to build their equity much faster than a standard mortgage.

But the loan truly differs from a standard loan because it focuses on paying off the principal first, not the interest. According to its creators, in the first three years 77% of each monthly mortgage payment pays off the principal, creating huge amounts of equity for home owners looking to sell in a short period of time. For a standard 30 year loan, in those years 68% of the payment goes towards paying the interest, leaving buyers with little equity comparatively.

Now obviously, there has to be some take to the give in this loan. Due to its short term and focus on principal, a WBHL will always have higher monthly payments than a standard mortgage. But the return on equity and 15 years less of monthly payments may be a worthy trade off for higher payments initially. The WBHL will have its first test run in Charlotte, North Carolina, which was chosen as the initial test market.

More recent articles on mortgages:

Mortgage Rates Below 4%

Wealthy Paying Lower Mortgage Rates

Americans Overpaying for Mortgages?

Source: http://www.realtor.com/news/new-15-year-mortgage-with-zero-down-payment-debuts/

 

Mortgage Rates Drop Below 4 Percent

by Tim Hart

The interest rate on a 30 year fixed mortgage loan dropped below 4% for the first time since June of 2013. The rate hit 3.97% this last week and now has become a more opportune time to consider purchasing real estate. The drop has been a much larger drop than other adjustments taken this year.

According to CNN real estate, the drop in rates have come because investors have been buying US treasury bonds in droves over the last week. In general, mortgage rates usually move in sync with the 10 year bond note, so when the yield fell to 1.86%, it seemed natural that fixed-mortgage rates would drop as well. Investors have moved to purchasing bonds because of the economic unrest in Europe. Rates have actually lowered because of investors actions, where most experts expected mortgage rates to rise after the Fed pulled back on its economic stimulus.

If you are considering purchasing real estate in Bozeman, Belgrade, Big Sky or the greater Gallatin Valley, lower rates may have made you far more eligible to buy than you may have been even a week ago. Over 30 years, even the smallest adjustments in mortgage rates can save you a lot of money in the long run.

Source: http://money.cnn.com/2014/10/16/real_estate/mortgages-rates-drop/index.html

Wealthy Buyers Paying Lower Mortgage Rates

by Tim Hart

Wealthy homebuyers in the US are receiving cheaper loans in higher numbers than other homebuyers also applying for mortgages. These deep pocketed buyers are paying lower average rates on high dollar value loans known as jumbo mortgages. The Mortgage Bankers Association reported that the average rate of jumbo loans for houses above $417,000 or $625,000 in high priced areas averages around 4.24% interest. However, a normal buyer, paying an standard 30 year fixed mortgage can expect to pay interest rates of 4.36 percent.

Now, lenders are accepting smaller down payments and even waiving mortgage insurance. Down payments on the big loans can be as small as 10% of the value, compared to the standard 20 percent. Banks have even begun lowering the credit standards that they use to underwrite such loans. Before, a jumbo borrower would be expected to maintain at least a 700 credit score to even be eligible. Now, lenders have given out loans to people with scores as low as 650.

Why though? Well in general, banks are willing to give these friendly loans, not for the profit they make themselves, but oftentimes on the capital the can use with other clients. Banks take that capital to use in brokerage accounts or retirement funds, where such capital can exponentially increase profit margins. Then, they can turn to prospective clients and show them the investment potential of that bank. Keeping those big loans on the books allows them to invest and lend more, adding to their clientele and prestige.

Now may be the perfect time for big buyers to do just that—buy big. Mortgage rates are low, the market is stabilizing, and as banks continue to make jumbo loans more appealing, wealthy buyers can take full advantage.

 

Source: http://money.cnn.com/2014/09/21/real_estate/jumbo-mortgages-getting-cheaper/index.html

Americans Paying too Much for their Mortgages?

by Tim Hart

American home owners are missing out on lower mortgage payments according to Freddie Mac’s Primary Mortgage Survey. Mel Watt, head of the Federal Housing Finance Agency, has gone on tour throughout the country, in order to spread awareness on the benefits and risks of refinancing their home. Mortgage rates hit their lowest level in years, at 4.1%, supporting the fact that now may be the time to refinance.

Home owners have had a chance during the recession to refinance through the Home Affordable Refinance Program (HARP), but now many Americans assume that HARP no longer applies to them. However, Mel Watt disagrees. Any homeowner who owes more money than their house is worth will struggle to find any lender who is willing to refinance. The HARP program makes this possibility much more likely. Mel Watt believes that almost 800,000 Americans are missing their opportunity to save serious money on their mortgage. In some cases, specific borrowers have used HARP to save $200 a month.

Please make sure to consider the potential benefits and drawbacks of refinancing a home. Also make sure to re-check your credit to see if it has improved since you took out the loan as you may receive better rates.

Source: http://www.realtor.com/news/800000-homeowners-missing-lower-mortgage-payments/

Mortgage Rates Hit Lowest for 2014

by Tim Hart

After mortgage rates dropped in the U.S. for the second week in a row, borrowing costs hit their lowest rate yet for 2014. This week, the average rate shifted from 4.12% to 4.1% for a 30 year fixed mortgage. Although the percentage shift may be small, when added up over 30 years, even the smallest changes can greatly impact the cost of home ownership. A 30 year rate has not been this low since the end of October last year. 15 year mortgages also saw price reductions, slipping from 3.24% to 3.23% this month. The 30 year rate has been consistently declining since it had hit a two year high of 4.58% last August. Experts foresee the lower rates supporting and fostering home demand. July trends support these expert’s claims, as previously owned homes sold at an annualized rate of 5.15 million this July, up 2.4% from June. The longer the rates stay low, the more activity can be expected in the future of the US housing market.

Source: http://realestate.msn.com/blogs/post--mortgage-rates-hit-new-2014-low

Breaking Down Credit Score & Mortgage Rates

by Tim Hart

 

History has shown that the best way to predict a person’s behavior over the near-term future is to look at that person’s behavior in the recent past. It’s a concept similar to the First Rule of Physics — an object in motion tends to stay in motion.

This basic concept applies itself to predicting an individual’s spending habits as well. Precedent shows that a person who regularly pays their bills will continue to pay their bills on time in the foreseeable future. Your credit score therefore is based upon a person’s predicted spending habits based upon past performance. Specifically, to mortgage lenders, your credit score is your probability that you will pay your mortgage on time for the next 90 days. Higher credit scores correlate with lower risk. Transversely, low credit scores are associated with a high risk and that is why lower credit scores receive a higher mortgage rate.

Mortgage lenders use a credit model known as FICO. It is your FICO score that impacts the mortgage rate a person is eligible for. FICO is paired with the newly implemented LLPA (Loan-Level Pricing Adjustment) that was put in place due to the major mortgage market losses in 2008. LLPA are ‘discount points’ applied to a mortgage rate based upon the borrower’s level of risk. Here is an example:

Assuming a 20% downpayment, look at how discount points change based on credit score. Fees get massive for FICOs under 700.

740+ FICO  : There are no discount points required. This loan is “low risk”.

720-739 FICO :  0.250 discount points are charged to the borrower, or $250 per $100,000 borrowed

700-719 FICO :  0.750 discount points are charged to the borrower, or $750 per $100,000 borrowed

680-699 FICO :  1.500 discount points are charged to the borrower, or $1,500 per $100,000 borrowed

660-679 FICO :  2.500 discount points are charged to the borrower, or $2,500 per $100,000 borrowed

For more details: EMAIL ME!

Source: http://pro.truliablog.com/buyers/better-mortgage-rates-start-with-better-fico-scores-2/

Improved Job Statistics Propel Mortgage Rates Up

by Brittney Dahlberg

Improved Job Statistics Propel Mortgage Rates Up

1-Year ARMs: hold as an average of 2.9%. A year ago the 1-year ARM averaged at 3.4%

5-Year ARMs: found a mean of 3.06% this week. A year ago, a 5-year ARM was at 3.47%

15-Year FRMs: averaged at 3.37% as compared to last year’s 3.72%

30-Year FRMs: 4.12% is the average this week in contrast to 4.27% last year!

ARMs (adjustable-rate mortgages) and FRMs (fixed-rate mortgages) are important indicators for potential buyers who are on the threshold of buying. 30-year financing options are the most popular according to Freddie Mac.

“An employment report that was better than market expectations helped to lift long-term Treasury bond yields and mortgage rates as well,” Frank Nothaft, Freddie Mac’s chief economist, notes. In September, the economy added 103,000 workers; however, the unemployment rate still remained high at 9.1 percent.

Record lows have been being seen across the board over the last month with future projections of staying well below 5% through 2013.

If now is the time for you to buy, CLICK HERE

http://realtormag.realtor.org/daily-news/2011/10/14/improved-job-report-sends-mortgage-rates-higher 

Displaying blog entries 1-7 of 7

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